COLA Increase Watch 2023-2024

Updated: November 9, 2022

Table of Contents

    The 2023 COLA increase will be 8.7%, according to the Social Security Administration.

    It’s too early to figure out the 2024 COLA rate, but we’ll keep tracking inflation data and other factors that could impact the 2024 COLA increase here.

    2022 – 2023 COLA

    The Social Security Administration announced the 8.7% COLA increase in October 2022. It’s the largest COLA increase since 1981. The SSA expects it will provide an additional $140 per month to roughly 70 million Americans who receive Social Security and Supplemental Security Income benefits.

    The record-high 2023 COLA increase came on the heels of a sizeable 2022 increase.

    The Social Security Administration announced 2022’s 5.9% COLA increase in October 2021. It was the largest increase in 40 years at the time, but the 8.7% 2023 COLA increase has it beat.

    Soaring inflation, a resurgent economy and other factors have contributed to large COLA increases, according to the Social Security Administration.

    The U.S. Bureau of Labor Statistics (BLS) compiles the CPI-W. It is the basis for COLA adjustments for military, federal and Social Security recipients.

    To calculate yearly COLA adjustments, the Social Security Administration compares third-quarter inflation measurements from July, August and September to the same quarter in the previous year. In short, 2022 inflation data determined 2023 COLA rates, and 2023 inflation data will determine 2024 COLA rates.

    CPI-W Measurement
    202020212022
    July252.636267.789292.219
    August253.597273.567291.629
    September254.004274.31291.854
    Third quarter total754.999808.157875.702
    Average (rounded to the nearest 0.001)253.412269.386291.901
    Inflation According to the CPI-W1.3%5.9%8.7%

    2023 – 2024 COLA (Cost-of-Living Adjustments) Increase Watch

    2022 COLA & CPI Summary

    • The September CPI-W (291.854) increased over the last 12 months by 8.5%.
    • Since September 2021, the all items index has increased 8.2% before seasonal adjustment. September’s increase is 0.1% lower than August’s figures.
      • The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4% in Sepetmber n a seasonally adjusted basis after a 0.1% increase in August.
        • The index for used cars and trucks declined 1.1% in September.
        • The food index increased 0.8% in September, and the food at home index increased 0.7% as well.
        • The energy index decreased 2.1% in September.
    • The index for all items less food and energy increased 0.6% in September.
    • Since September 2021, the index for all items less food and energy increased by 6.6%, the energy index increased 19.8% and the food index increased by 11.2%.

    2023 COLA Effective and Payment Dates:

    • Retired military veterans, U.S. Department of Veterans Affairs (VA) rates for compensation and pension for disabled veterans and surviving families will go into effect Dec. 1, 2022. The first checks with the new rates went out on Dec. 30, 2022.
    • Social Security benefits became effective with December 2022 benefits, payable in January 2023.
    • Federal Supplement Social Security Income and Social Security Disability Insurance (SSDI) payment levels became effective for payments made for January 2023.

    2022 COLA (Cost-of-Living Adjustments) Increase Results

    Q3 (July-Sept.) 2022 COLA & CPI Summary

    • The 2022 average Q3 (July-September) CPI-W (291.901) increased year over year by 8.7%.
      • The September CPI-W (291.854) increased year over year by 8.5%.
      • The August CPI-W (291.629) increased year over year by 8.7%.
      • The July CPI-W (292.219) increased year over year by roughly 9.1%.

    Veterans’ Compensation Cost-of-Living Adjustment Act of 2022

    In October, President Joe Biden has not yet signed the 2022 cost-of-living increase for veterans, which ties the veterans benefit increases to Social Security COLA increases.

    Once signed, the legislation will directs the VA to increase – as of Dec. 1, 2022 – the rates for VA disability, additional compensation for dependents, clothing allowances for certain disabled veterans and Dependency and Indemnity Compensation (DIC) for surviving spouses and children.

    While Social Security benefits are automatically adjusted annually to keep pace with inflation, Congress must pass legislation annually to provide COLA for veterans and surviving family members receiving those types of compensation from VA.

    Why a COLA Increase May Not Help Social Security Recipients

    Senior citizen household spending may outpace COLA because the measurements that determine COLA don’t reflect significant expenses like healthcare and gas.

    If Medicare climbs at an equal or higher rate, premiums may offset COLA increases. However, Medicare premiums will decrease in 2023 for the first time in more than 10 years.

    COLA (Cost-of-Living Adjustment) Affects These Programs and Stakeholders:


    Quarterly CPI-W for 2021 and 2022

    Year20212022Year over Year Increase
    Quarter 1257.025279.4729.04%
    Quarter 2263.754288.3809.33%
    Quarter 3268.421291.9018.70%
    Quarter 4253.994TBDTBD
    Annual252.248TBDTBD

    Monthly CPI-W for 2021 and 2022

    Month2021 CPI-W2022 CPI-WYear over Year Change
    January255.296276.2968.2%
    February256.843278.9438.6%
    March258.935283.1769.4%
    April261.237284.5758.9%
    May263.612288.0229.3%
    June266.412292.5429.8%
    July267.789292.2199.1%
    August268.387291.6298.7%
    September269.086291.8548.5%
    October271.552TBDTBD
    November273.042TBDTBD
    December254.081TBDTBD

    The table below shows estimated future cost-of-living adjustments (COLAs) as determined by assumptions in the 2022 Trustees Report.

    COLA Estimates by Year

    YearCOLA
    20215.9%
    20228.7%
    2023TBD
    2024TBD

    The CPI-W takes into account eight major spending categories:

    • Food and beverages
    • Housing
    • Apparel
    • Transportation
    • Medical care
    • Recreation
    • Education and communication
    • Other goods and services

    How COLA is Determined

    The Bureau of Labor Statistics’ Consumer Price Index (CPI-W) determines the annual Cost-of-Living-Adjustment (aka Cost-of-Living Allowance). It is based on the percentage increase of the CPI-W from the third quarter of the previous year versus the current year’s third quarter (July, August, and September).

    Veterans who retire during the current calendar year will receive a temporary partial COLA due to already receiving a military pay raise in January (View the 2022 Military Pay Charts here).

    • The COLA increase is only set at the CPI-W if the increase is less than 2%.
    • If inflation is between 2 to 3% then COLA is set at 2%.
    • If the CPI-W is greater than 3% then COLA is set at 1% below the CPI-W.

    COLA Versus Federal Pay Increases

    Pay increases for current federal workers and COLA for retired workers often differ because they are based on changes in different economic variables.

    Changes in private-sector wages and salaries determine federal pay increases. The government indexes federal civil service worker pay to private-sector salaries to ensure government pay remains competitive with the private sector.

    Cost-of-living adjustments (COLA) ensure that a retiree’s income maintains buying power for the same amount of goods and services every year.

    YearCOLA
    20238.70%
    20225.90%
    20211.30%
    20201.60%
    20192.80%
    20182.00%
    20170.30%
    20160.00%
    20151.70%
    20141.50%
    20131.70%
    20123.60%
    20110.00%
    20100.00%
    20095.80%
    20082.30%
    20073.30%
    20064.10%
    20052.70%
    20042.10%
    20031.40%
    20022.60%
    20013.50%
    20002.50%
    19991.30%
    19982.10%
    19972.90%
    19962.60%
    19952.80%
    19942.60%
    19933.00%
    19923.70%
    19915.40%
    19904.70%
    19894.00%
    19884.20%
    19871.30%
    19863.10%
    19853.50%
    19843.50%
    1983N/A
    19827.40%
    198111.20%
    198014.30%
    19799.90%
    19786.50%
    19775.90%
    19766.40%
    19758.00%

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